NEW YORK — Financial stocks were broadly lower Tuesday amid a global selloff on worries about continued euro zone woes, including the impact of the Bank of Spain's bailout of savings bank CajaSur, as well as tensions between North and South Korea.

The sector has been battered in recent weeks, pausing to catch its breath just a few times, as European debt woes and uncertainty around financial regulations in the U.S. have weighed on stocks. Some of that uncertainty was removed last week when the Senate passed its version of a regulatory bill, providing a little more clarity to investors.

"The market is a constant balance between greed and fear," Sandler O'Neill analyst Jeffery Harte said, and fear about risky assets is growing. Until that risk appetite rebounds, there are more sellers than buyers in the market.

Citigroup Inc. led declines among the big U.S. banks, falling 4% to $3.63. Bank of America Corp. fell 2.7% to $14.99, Morgan Stanley dipped 2.8% to $25.04, JPMorgan Chase & Co. slid 2.3% to $37.74 and Goldman Sachs Group Inc. slipped 0.8% to $135.52.

The declines in financial stocks came amid a broad market selloff. The financial sector of the S&P 500 slipped 2.4% in recent trading, while the broader index was off 2.3%.

Global markets remained focused on Spain, after a plan to consolidate the Spanish savings-bank sector was submitted to the Spanish government and on tensions in Korea after Kim Jong-il ordered the North Korean military to be ready for combat. Political tensions between North and South Korea have risen since a team of international investigators concluded that Pyongyang was to blame for the deadly sinking of a South Korean naval warship in March.

Sanford C. Bernstein analyst Brad Hintz said the market is wondering what the impact of problems at Spanish savings banks will be at other counterparties in Europe and around the world. Europe has come a long way in addressing its problems, but there are still unaddressed issues out there, he said.

"The market will rightfully panic for a bit," Hintz said, and there will likely be a lot of flow into U.S. Treasurys, but in the end, the big U.S. banks and the big European banks like UBS AG, Credit Suisse Group, Deutsche Bank AG and Barclays PLC will survive.

An economic recovery is inevitable — that isn't the issue, he said. The issue is the timing of a recovery, and it looks like retail investors and the asset management industry might take longer than expected to bounce back.

UBS recently fell 4.3% to $12.61, while American depositary shares of Credit Suisse declined 4% to $37.13. Deutsche Bank declined 3.8% to $55.81 and Barclays' ADSs dropped 6.1% to $15.96.

Harte said the fundamentals of most U.S. banks don't warrant the sharp declines in their shares over the past few weeks, and thinks some are getting really attractive, citing Citi, which trades below tangible book value, and has clearly improving credit trends. Goldman Sachs trades at 1.2 times tangible book value, he said, which means the stock is pricing like forward earnings are going to be less than half the current consensus, an argument he disagrees with.

Other financial stocks also declined, with insurer American International Group Inc. falling 6.5% to $32.32 despite comments from Prudential PLC's chairman saying the "vast majority" of Prudential's shareholders support its planned $35.5 billion purchase of AIG's Asian life-insurance business. A shareholder vote is set for June 7. Prudential PLC's ADSs fell 3.1% to $14.60.

Standard & Poor's equity analyst Cathy Seifert said AIG's decline is likely because it's a very volatile stock in what's shaping up to be a very volatile market Tuesday. Seifert cut her target price on AIG to $38 Monday. She said the stock may be somewhat priced for a recovery, and though it does have large overseas exposure, Tuesday's move is likely due to volatility.

Other insurers such as Genworth Financial Inc., Assured Guaranty Ltd. and Protective Life Corp. also fell. Genworth declined 4.7% to $13.69, Assured Guranty dropped 5.7% to $14.03 and Protective Life fell 5.1% to $19.07.

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